At today’s State Budget Committee meeting, a new revenue forecast for fiscal years 2009-2011 showed a nearly $1.1 billion decline from the forecast offered less than six weeks ago.
No, as committee chair Luke Kenley (R-Noblesville) pointed out, that doesn’t mean a $1.1 actual loss but a decline from a projected increase that many had doubted when it was delivered.
The forecasters went back to the drawing board to try and figure out why the April projections were so far off of the actual April collection. An expanded group of technical advisors decided to revise their sales tax collection model and added variables to the income tax model to adjust each of the three fiscal years.
The projected decreases (from April’s outlook): $444 million in fiscal 2009, followed by $331 million in 2010 and $316 million in 2011. While the projected revenue decline of 7.5% from 2008 to 2009 is unprecedented in state history, forecasters noted that it is a smaller decline than nearly all other states (including Michigan at an astounding 20%).
Kenley offered that more attention should be paid to the actual revenue numbers — $12.9 billion, $13.1 billion and $13.6 billion for the 2009-2011 period, respectively. That compares to a state that operated in 2008 on a budget of less than $13 billion after state agency budget cuts were ordered and enacted. His conclusion, including the addition of the federal stimulus funds: "If we can flat fund or come close to it over the next three years, we will be OK."
Bill Crawford (D-Indianapolis), chair of the House Ways & Means Committee, isn’t ready to buy into that approach. He said during the meeting that he and House Speaker Pat Bauer (D-South Bend), "want to make sure if we adopt the hunker down, man the barricades mentality, that we don’t allow the education infrastructure to decline unnecessarily." It appeared that others on the committee, through their reactions, were questioning whether flat-lining would be enough. In other words, this battle is far from over.
Crawford expressed "discomfort" with the fact that a dramatically different budget forecast was presented today as compared to April 17. He noted that while part one of his AAA philosophy (acquire information) is complete, it is time for analysis before deciding how to act.
Next up: a budget proposal from Gov. Mitch Daniels, likely next Monday, June 1.